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The U.S. stock market has enjoyed a nearly uninterrupted assault on records, highlighted by the Dow Jones Industrial Average (DJIA) closing at a milestone above 29,000 for the first time and the S&P 500 (SPX) achieving its own landmark close above the psychological round-number at 3,300, while investors in the Nasdaq Composite Index (COMP) may have their sights trained on 10,000.
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Just a few years ago, Silicon Valley venture capitalist Michael Rothenberg was on top of the world — almost literally. The startup financier, still in his early 30s, was hosting clients at the Super Bowl, booking the San Francisco Giants’ baseball stadium for all-day events, and flying the favored few over Napa Valley vineyards in hot-air balloons. Rothenberg, only a few years out of Harvard Business School, was an early-stage investor in new-wave fintech companies like Robinhood.
Savvy investors know chasing dividend yield is dangerous. And those that tried to do it anyway with some S&P; 500 stocks learned why not to, yet again.
5G could be the key growth driver for "tech" stocks in 2020.That's the upshot of a new report out of investment bank Needham this week, as its analysts report back from the just-ended Consumer Electronics Show in Las Vegas. Accelerating sales of both handsets and the infrastructure needed to make them work will provide a "major growth catalyst" for semiconductor-makers in particular, and tech in general, opines Needham, accelerating off a slowdown in the second half of 2019."5G handset roll-outs [will accelerate] throughout 2020, especially in the 2H," culminating in total phone sales of perhaps 200 million by the time the year is out. So... how do you plan to play this trend?Leveraging TipRanks' Stock Screener tool to comb through Needham's picks, we've come up with three stocks that win high marks not just from the analyst making this 2020 forecast -- but from Wall Street analysts in general. Here's what you need to know about them.Tower Semiconductor (TSEM)First up is Tower Semiconductor, which as the name implies is a maker of analog intensive mixed-signal semiconductor devices.Investors in Tower Semiconductor stock can expect to see "low double-digit" organic growth in 2020, says Needham analyst Rajvindra Gill. And while that may not sound like much, it's significantly faster -- potentially as much as twice as fast -- as the 6.7% growth rate that most Wall Street analysts are expecting (which could mean additional upgrades will follow as Tower delivers on its promises).Tower aims to aggressively expand capacity at its factories churning out 200mm and 300mm chips to supply growing demand for 5G smartphones, which are experiencing "stronger than expected 5G proliferation." In particular, Tower sees an opportunity to supply makers of OLED fingerprint sensors for these phones. Oh, and gross margins on these products may already have "bottomed out" at 19%.Indeed, Gill takes the lead on recommending this one, assigning Tower stock a "buy" rating and $30 price target. (To watch Gill's track record, click here)With sales growing faster than expected, and profit margins firming perhaps sooner than expected, the outlook for Tower is looking pretty good, and $30 a share is certainly not out of the question -- nearly a 17% profit from today's share price.TSEM has built its Strong Buy consensus rating on solid performance which has attracted three "buy" and one "hold" ratings in the last three months. This stock is selling for $25.55, so the $26.83 average price target implies an upside of 5%. (See Tower stock analysis at TipRanks)Marvell Technology (MRVL)Long known as a designer of analog and mixed-signal embedded and standalone integrated circuits, Needham analyst Quinn Bolton views Marvell Technology as a prime beneficiary of the growing 5G base station market, which Bolton sees as capable of producing up to $6 billion in annual sales globally.Huawei will be Marvell's primary competitor in this market, dominating sales in both China and Europe, which could pose a problem. However, the analyst still sees $4 billion in annual sales elsewhere as up for grabs. To win this work, Marvell must win business from the base station makers that aren't named Huawei, which include Ericsson, Nokia, and Samsung.The good news here (for Marvell) is that Bolton believes "Huawei’s ability to ship critical 5G infrastructure products ... targeting international markets may be further limited," decreasing the competitive threat outside of China and Europe.Result: Bolton believes Marvell stock is a "buy." In so doing, he's joining a chorus of nine other analysts who have assigned Marvell stock buy-equivalent ratings over the past month. (See Marvell stock analysis at TipRanks)Resonant Inc. (RESN) Last and certainly least-well-known, we come to Resonant. A bona fide microcap at just $80 million in market cap, Resonant hails from Goleta, California, where it's trying to build a business making designing filters for radio frequency electronics used in smartphones.The company's not profitable yet, nor free cash flow positive, yet Needham likes this one fully as much as its larger, better-known peers in the semiconductor space.Indeed, assigning Resonant a $4.50 target price (the stock costs less than $2.50 a share today), Needham's Rajvindra Gill makes the case that this stock could be a near two-bagger as it expands to serve 5G needs in an RF filter market that could grow to $28 billion in annual sales by 2025 (from just $12 billion in 2019).Ramping demand for "streaming video and increased bandwidth requirements" will be the catalyst here, as 5G speeds demand more advanced tech to service them.At the same time, though, Gill urges investors not to forget about 4G just yet, which will "continue to play major role in the market." This is because in the early stages of the 5G revolution, true 5G speeds won't be available everywhere, all the time, and investors should anticipate that "the 4G network to provide a backstop for 5G coverage holes." Because 4G is currently Resonant's strength, there's an opportunity for this tiny company to become a major player in the "old" technology as its competitors focus their attention elsewhere.Survey says... Wall Street agrees. A grand total of four out of four ratings published in the past two months say Resonant is a "buy." And even if not everyone's as optimistic as Needham, the consensus price target on this stock is still $4.25 a share -- and 71% upside for buyers today. (See Resonant’s price targets and analyst ratings on TipRanks)
The tax-free deal on the Roth IRA may seem too good to be true, but rest assured that there are at least five good reasons for it to stay that way.
(Bloomberg) -- McDermott International Inc. is preparing to file for bankruptcy as soon as next week to address its more than $4 billion debt load, according to people with knowledge of the matter.The Houston-based company, which builds oil platforms and gas-export plants for energy producers, is negotiating a restructuring plan that could see its debt converted into equity with existing term-loan lenders getting the majority of the shares, said the people. Unsecured creditors would receive less than 10% of the equity along with warrants, one of the people said.The terms of the restructuring are still being negotiated and could change, according to the people, who asked not to be identified because the talks are private. Baupost Group and HPS Investment Partners may provide a bankruptcy loan of about $2 billion, the people said.Representatives for McDermott and HPS declined to comment. A representative for Baupost didn’t immediately respond to requests for comment.McDermott has been under significant pressure since September, when its stock and bonds plunged on news that it had hired turnaround advisers. The company has struggled to integrate its acquisition of Chicago Bridge & Iron Co. and clear a backlog of projects, crimping earnings.Late last year the company secured part of a $1.7 billion rescue financing package and entered into a forbearance agreement with some of its lenders, but that relief period expired Jan. 15. Its credit agreements were amended so that acceleration of its bonds wouldn’t constitute a default through Jan. 21. On Friday, its 2024 bonds were trading around 9.5 cents on the dollar, according to Trace bond-trading data.McDermott has also been trying to shore up liquidity through a sale of its Lummus Technology business. The company previously said it had received unsolicited bids to acquire all or parts of Lummus with a valuation exceeding $2.5 billion.To contact the reporters on this story: Allison McNeely in New York at firstname.lastname@example.org;Katherine Doherty in New York at email@example.comTo contact the editors responsible for this story: Rick Green at firstname.lastname@example.org, Boris Korby, Nicole BullockFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
US stocks, junk bonds, silver, oil, bitcoin and even Greece-focused exchange traded funds posted stunning gains, boosted by easy central bank policies. Now new risks lurk, as the US Federal Reserve continues to keep interest rates low and pursue monthly liquidity injections, as well as purchases of Treasury bills at a similar magnitude as previous rounds of quantitative easing. Jeffrey Gundlach, chief executive of DoubleLine Capital, said it was a remarkable day for financial markets in late October, when Fed chair Jay Powell said he would need to see a “really significant move up in inflation that’s persistent, before we would even consider raising rates to address inflation concerns”.
In the latest installment of Barron’s annual investment Roundtable, five of our 10 panelists take their turn naming top investment picks—and some pans.
Markets finished last year on a high note, with annual gains between 22% on the Dow Jones and 35% on the NASDAQ. But just because the markets overall did well, it does not mean that every individual stock saw big gains. Energy stocks, in particular, had a difficult year.According to David Rosenberg, chief economist and strategist of Rosenberg Research and Associates, “In a world where everything looks so expensive, energy stocks look downright cheap.” At the same time, he sees the current low prices as a prime time to buy in. He believes that energy stocks are ready for gains.Defending this belief, Rosenberg points out several factors. First, that US shale companies, which have underperformed the markets due to low oil prices, are working hard to bring investors back in. These companies need capital infusions to maintain operations, and their best path to that is finding a way to push share prices back up.Second, the sudden easing of US-Iran tensions in the Middle East has eased fears of renewed conflict that could constrict the flow oil in world trade. While such tensions would inflate oil prices, their easing promotes safer shipping and renewed exploration in the theater – both better for the industry in the long run.As Rosenberg puts it, “In the energy space… all that has to happen is for something bad not to happen and there will be a positive rerating as the end-result.”TipRanks, a company that collects and collates reams of real-time information on Wall Streets publicly traded stocks – and analysts – has the data necessary to test this hypothesis. Setting the Stock Screener filters to show only stocks from the basic materials sector, with a Strong Buy analyst consensus and upside potential of 20% or more, we picked three energy stocks that Wall Street’s agree are ready to start climbing.Callon Petroleum Co. (CPE)We’ll start with Callon Petroleum, a small-cap oil and gas exploration and development company focused on the Permian Basin of West Texas. Over the past decade, the Permian formation has become North America’s largest proven energy reserve and has pushed the US into position as the world’s top oil producer.Over the course of 2019, while the oil industry was ramping up production, low prices put a damper on profits. CPE shares slipped 26% during the year on falling revenues.The falling revenues and share depreciation came even as the company was managing to beat analyst expectations on reported earnings and revenues. In Q3, the most recent reported, CPE showed EPS of 19 cents, 5.5% above expectation, and revenues of $155.4 million, 2% over the forecast. It was the third time in a year that CPE had beaten the EPS forecast.This could explain CPE’s positive indication from TipRanks’ measurement of investor sentiment. Purchases of the stock are up in both the past 30 days and the past week – a very positive sign for Callon.The company caught the attention of RBC Capital analyst Brad Heffern. Heffern was attracted by Callon’s placement in Texas’ most productive oil region, as well as the company’s potential for increasing free cash flow. He wrote, “We like the company's strong asset positions in the Permian and Eagle Ford Basins… we think CPE has successfully transitioned from a Permian pure play growth story, to sustainable corporate return model with asset diversification, centered around sustainable growth and free cash flow generation. As CPE transitions to a free cash flow model, we would expect the company to… ultimately consider implementing a dividend or returning cash to shareholders through a repurchase program.”Heffern put a Buy rating on CPE, with an $8 price target. His target suggests room for an eye-opening 94% upside growth potential this year. (To watch Heffern’s track record, click here)Currently, Callon sells for $4.22, a bargain price. The average price target of $7.33 shows the stock’s potential – an impressive 74% upside. The Strong Buy analyst consensus rating is based on 8 Buys against a single Hold. (See Callon’s stock analysis at TipRanks)QEP Resources, Inc. (QEP)Our second stock, QEP, is another exploration and development company, working in crude oil, natural gas liquids, and dry gas deposits. With headquarters in Denver, Colorado, QEP has oil and gas operations in both the Texas Permian Basin and North Dakota’s Williston Basin.Ending 2018, QEP had proven reserves of 658 million barrels of oil equivalent, and in Q3 2019 produced 8.4 million barrels. The production breakdown for the quarter was 67% oil, 16% natural gas liquids, and 17% dry gas. During the same quarter, QEP bet the forecasts on EPS despite slowing production outputs. QEP had a strong cash position at the end of Q3, also, with $92.4 million on hand and borrowing against its revolving credit line.QEP shares dropped steadily in 2019, but turned up sharply in December. That gain mitigated the year’s loss, holding it to 21%. The recent tensions in the Middle East hurt the oil industry generally, including QEP shares – but QEP has not lost as much in January as it had gained the month before.Piper Sandler analyst Kashy Harrison was impressed with QEP’s overall position. Harrison believes the company has a solid foundation to improve the balance sheet, and that its prospects going forward depend more on management execution than anything else. He writes, “We think QEP looks cheap as long as it executes on the forward outlook. Notably, recent execution from new management coupled with a conservative approach toward forward guidance improves our confidence in the outlook… We expect FCF generated in the near-term will primarily clean up the balance sheet…”Harrison’s Buy rating is backed up with a $6 price target, indicating room for a 54% upside. (To watch Harrison’s track record, click here)Like CPE above, QEP sells for a bargain price – this time, just $3.89. The average price target of $5.63 suggests room for a robust 44% upside. The Strong Buy analyst consensus rating is based on 4 reviews, including 3 Buys and 1 Hold. (See QEP’s stock analysis at TipRanks)Goodrich Petroleum Corporation (GDP)Third on our list is a micro-cap company, of just $105 million market cap, based in Texas and Louisiana. Unlike the companies above, Goodrich does not operate in the Permian Basin– it is focused on the Eagle Ford formation of East Texas. The company also has operations in Louisiana, where the majority of its operations are focused on natural gas exploitation in the Haynesville Shale.Goodrich saw strong production in Q3 2019, the most recent reported, with natural gas output reaching 136 million cubic feet per day in the quarter. This was a 61% year-over-year increase. Earnings came in at 14 cents per share based on $2 million net income, missing the forecasts however. The company’s higher output overbalanced lower gas prices to generate the positive earnings and avoiding a net loss.The third quarter may have been adequate, but 2019 as a whole was not good for GDP shares. The stock lost 32% during the year, and has started 2020 with further losses. The result is an energy company with a depressed share price – and rising output on expanding exploration areas. This solid base has attracted attention from Wall Street analysts.Writing from Roth Capital, John White is impressed with Goodrich’s management. He said, after the quarterly earnings call, “[The] 2020 plan continues GDP’s allstar execution and prudent management practices, focused on cash flow and balance sheet strength while still achieving production growth.”White puts an $18 price target on GDP, implying a whopping 110% upside growth potential and supporting his Buy rating. (To watch White’s track record, click here)Northland’s Jeff Grampp agrees that GDP is a Buy proposition. He weighed in at the same time, and wrote, “The company's 2020 development program assumes 13 gross (5.8 net) wells are placed to sales (72% of net wells operated) with an average lateral length of 8,500 feet… We think the new guidance implies an attractive financial position for GDP. FCF is expected… to yield ~16% at the midpoint. Additionally, leverage is expected to end 2020 at ~1x and there is solid downside protection with 45%-50% of natural gas production hedged.”Grampp’s Buy rating is supported by a $13 price target – which indicates his confidence in 51% growth to the upside. (To watch Grampp’s track record, click here)Goodrich has a unanimous Strong Buy consensus rating, based on 3 Buy reviews from Wall Street. Shares are cheap, at just $8.56, and the $15 average price target suggests an upside potential of 72% – most impressive indeed. (See Goodrich’s stock analysis at TipRanks)
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Tesla has met certain targets that are “remarkable” while Spotify had more than 100 million premium subscribers last year, and is “outcompeting Apple,” says James Anderson, partner and portfolio manager at Baillie Gifford.
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Hexavest of Montreal, an affiliate of Eaton Vance, more than doubled its investment in the embattled aerospace giant Boeing. Hexavest also bought Home Depot, Intel, and Walmart stock in the fourth quarter.
Let's start with some good news – according to Goldman Sachs’ chief global equity strategist Peter Oppenheimer, 2020 will see a continuation of last year’s surge. Oppenheimer believes 2019’s bull run was down to valuation expansion. If the history books are anything to go by, then 2020 will see a repeat of the trend.“Years of strong valuation expansion are generally followed by positive returns in the equity market, although typically at a slower pace. Moderate profit growth this year and higher starting multiples point to total returns in the high single digits for the asset class globally in 2020,” Oppenheimer noted.With this in mind, we decided to have a look at two stocks Goldman Sachs thinks are poised to make headway in 2020. Just to be safe, we run them both through TipRanks Stock Screener tool to ensure that other analysts agree with Sachs. Let's take a closer look.Linx SA (LINX)Let’s start off in Brazil, the home of Linx SA, Latin America’s largest retail management software company. LINX boasts over 40% of the retail management software market in Brazil; its cloud-based enterprise software offers retailers a variety of services, including payments solutions and business management tools.The company has been racking up partnerships recently; one with Rappi, a Latin American unicorn company and creator of an on-demand delivery app, which will enable brands in Linx’s portfolio to sell through the app. The second is with PicPay, one of Brazil’s largest payment apps which boasts more than 13 million users. Consumers will be able to make QR Code payments at more than 100,000 establishments using the Linx system.Despite disappointing 3Q19 results and Linx Pay’s “slower-than-expected progress,” Goldman Sachs’ Diego M. Aragao believes the company has solid fundamentals. The 4-star analyst said, “LINX has been reinforcing its distinguished ecosystem to become a one-stop-shop for all-size retailers in different verticals, providing a fully integrated platform for brick-and-mortar and digital customers in Brazil. The company has been also investing in capabilities to facilitate the end-to-end sales process with an innovative payment solution that leverages LINX’s deep knowledge of the retail sector and clients, acquired over the past 20 years.”While Aragao estimates that the financial benefits from new initiatives will take a while to become apparent, he believes the recent setbacks are already factored into the price, which represents a “good entry point.” Therefore, Aragao rates Linx a Buy with a price target of $11. The figure implies possible upside of 25%. (To watch Aragao’s track record, click here)The Brazilian software company has only one other analyst currently keeping an eye on its prospects. The additional Buy, though, provides Linx with a Moderate Buy consensus rating. Put together, the average price target of $10.50 could see investors take home a 20% gain in 2020. (See LINX stock analysis on TipRanks)Wynn Resorts (WYNN)The US-China trade war impacted a number of industries in 2019 - automobiles, semiconductor companies and the agriculture sector all come to mind. With a foothold in both the US and China (specifically Macau), hotel and casino owner, Wynn Resorts has a vested interest in the two superpowers getting along.Despite the trade headwinds, Wynn’s share price outperformed the market in 2019, rising by 44% over the year. The stock got a significant boost in December following an announcement by the People's Bank of China that it will increase the daily wiring limit from individual’s accounts from 50000 yuan to 80000 yuan ($11400). The figure represents a massive 60% increase and was seen as a boon to the Macau casino industry, as the Chinese are by far the largest visitors of the autonomous region. Almost 68% of Wynn’s operating revenue came from Macau in the last quarter.According to Goldman Sachs’ Stephen Grambling, improving cyclical trends, both in Las Vegas and Macau, coupled with President Xi’s recent positive policy initiatives for the region are reasons to add Wynn to the to the company’s Conviction List.Grambling said, “Given our more bullish outlook on Macau, our price targets move higher as we expect earnings revisions to follow positive commentary on the upcoming earnings calls. Our conversations with investors have become more constructive recently from a predominantly bearish tone in late 2019, giving us conﬁdence that positive commentary from management teams could serve as a catalyst to sustain positive momentum.”Grambling, therefore, thinks the gambling establishment has a lot more fuel in the tank; along with reiterating a Buy on Wynn, the analyst upped his price target from $157 to $181. The new target implies upside potential of ~20%. (To watch Grambling’s track record, click here)All in all, the current sentiment on the Street towards the casino owner is mixed; 6 Buys and 4 Holds coalesce into a Moderate Buy rating. (See WYNN stock analysis on TipRanks)